Small-scale enterprises in Mamelodi and Kwazakhele townships, South Africa : survey results

The surveys consisted of a complete census of township businesses, as well as two supplementary questionnaires given to a smaller subsample of businesses. Previous studies have been few in number, and none has attempted a complete census of such firms in the townships. The business census provided information on the size and importance of small township businesses. Some 7,752 small enterprises are estimated to exist in the two enumerated townships. Although this is certainly a large number, small enterprises seem to be less concentrated in the townships than in comparable areas in other countries. These businesses provide employment for approximately 16,400 persons in the two townships. More than one quarter of all households in the townships are engaged in some form of small-scale activity. The small enterprises in the townships are dominated by women. Females make up 53 percent of the small enterprise labor force, and two-thirds of all small firm proprietors are women. One finding of the surveys is that female-run firms have a significantly lower average annual growth rate than do firms with male proprietors. Some characteristics of the township businesses differ markedly from those found in urban small enterprises in other countries. The proportion of firms in Mamelodi and Kwazakhele involved in manufacturing activities, 16.9 percent, is smaller than in comparable areas elsewhere. The size distribution of firms is also different: there were comparatively fewer one-person enterprises as well as fewer firms with 10-50 workers in the townships. It was also notable that the average annual growth rate of small enterprise employment is almost 24 percent, a higher rate than that found in other countries. Many of these distinctive characteristics might be at least partially explainable by the restrictive regulations that the South African government imposed on black enterprises prior to the 1980"s. The most commonly cited primary problems perceived by proprietors involved market difficulties, along with finance troubles. Although the absolute proportion receiving assistance is low, a higher proportion of township proprietors have received credit or training than in similar areas in other countries. Revolving savings societies, known as stokvels, are a prominent part of the small enterprise landscape in the townships. These stokvels generate sizable pools of funds, with the typical member making annual contributions of about R 1,060 ($425.00). Most of these funds are used for business purposes. Small enterprises are an important aspect of the economic life of the two South African townships surveyed, and this survey has provided important insights concerning these activities. Building on this large and dynamic base of indigenous entrepreneurship should be a component of any development strategy for South Africa. (Author abstract)